Dear Erica,
This is a difficult situation for me as I have always had excellent credit for the past 30 years. I retired a couple years ago with Social Security and a $4,000 per month income from real estate investments. When the real estate market dissolved two years ago in Las Vegas, my investment income stopped and the property had to be foreclosed on when our borrowers stopped paying. My income was reduced to only Social Security ($1,400 per month).
Now, I am in debt and can no longer afford to pay even the minimum amount required, which is around $1,100.00 per month. My total credit card debt is approximately $50K. I know the credit card companies will jump on me immediately with threats and numerous phone calls and ruin my credit. So I am between a rock and a hard place. Really, I can’t think of any alternative other than just “bite the bullet” and send out letters of explanation to each. As you know, the $1,400 a month I get from Social Security doesn’t go very far these days.
Any suggestions? My career for the past 20 years has been in commercial real estate finance. This industry is at a standstill in Las Vegas. I am 71 and have not had any success in searching for employment, although I have at least 50 submissions online. I am college educated with a B.S. in Business Administration. – Helpless in Las Vegas
Dear Helpless in Las Vegas,
Don’t panic or give up. Prioritize and focus on your vital needs: mortgage or rent, utilities, food, transportation and health care. While it’s true that $1,400 per month isn’t a lot, it’s something rather than nothing. Hopefully, it’s sufficient to cover those essentials. 
After covering those bills, I doubt that there will be much left over to make even partial payments to the credit card companies. Try not to feel badly about yourself. You’d pay if you could, right? But you must be realistic and separate your emotions from the equation.
I believe it’s more than time to bite the bullet, as you say. Therefore, contact those you owe immediately. Rather than call, conduct your communications by mail. Here’s an outline:
Dear Credit Card Company,
Re: account # __
- Paragraph No. 1: A brief summary of why you cannot meet your minimum payment.
- Paragraph No. 2: Your budget. Describe your income source, the amount you’re getting and your bills — and how much (if anything) remains after subtracting those expenses from your monthly Social Security check.
- Paragraph No. 3: Your proposal for resolution. This could be sending whatever you can afford based on the outline above. Maybe you have items to sell, and when you get a buyer, will apply the proceeds to the debt immediately. Or it could be nothing until you are back on your feet. Whatever you do, don’t promise anything you can’t or won’t stick to.
- Paragraph No. 4: What you are doing to resolve the problem. Explain that you’re aggressively seeking employment and will keep them abreast of your progress. Also point out that you’ve reduced your spending to your basic living expenses.
- Paragraph No. 5: Finally, let them know that you very much want to pay them and are doing everything possible to do so. Include the good faith payment if you have it.
Sincerely,
Your signature and contact information.
Send the letter via certified mail, return receipt requested. Then breathe and relax.
In most cases, the funds you receive from Social Security are exempt from a judgment creditor, meaning that if the creditors sued you and won, they’d be unable to garnish or claim the money. Even if they did take you to court, you can discharge the debt in bankruptcy. Yes, your credit rating will decrease, but it won’t look good if you fall behind anyway — and unless you get a great job right away, that looks inevitable. These are some repercussions you’ll have to accept. Besides, you can always rebuild those numbers, so set those concerns aside for now.
Regarding your job search, unfortunately, positions in your field — and your area — have become rather scarce. Still, I asked Johnny Laurent, vice president of Sage Employer Solutions, a human resources software company, how you can heighten your hiring chances.
“The best way to land a job will be through networking,” says Laurent. “Blind computer applications will not be successful. Build relationships with as many people as possible.”
In other words, call everyone you know and inquire about openings and join professional organizations. Apply more prudently, too, says Laurent. “Frustrated job seekers often begin applying to every open position they come across hoping something will work out. However, if your skills don’t match those listed in the job description, you are just wasting your time.”
I hope my response offers some relief — because I don’t see you as helpless at all. Just concentrate on what you can do, not what you can’t.
